DEVELOPMENT is about striking the right balance between consumption and investment. This is true of the national economy as it is with our individual lives. One fundamental fact of life is that for us to move forward, we have to ensure that our consumption does not exceed our income. Put in a different way, we have to develop a culture of thrift and try to put aside some of our earnings for investment or to save for that ‘rainy’ day.

Vice-President, Dr. Bharrat Jagdeo made a powerful point when he made a comparison between the PPP/C’s development agenda and that of the APNU+AFC’s ‘consumption’ philosophy. Had the PPP/C employed such a policy, the country would not have made the rapid progress as is currently the case under the PPP/C administration.

According to the Vice-President, “to understand the budget, and the starting point from the two competing ideas, we have to go back to the financial policy of the two parties… often when we accuse PNC, APNU+AFC of being a consumption-based party, we mean one that does not prepare the country for the future, one that taxes and spends in a particular manner.”

In a further elaboration on the ‘consumption philosophy’ of the previous administration, Dr. Jagdeo used budgets prepared by the PPP/C and that of the APNU+AFC to show that the capital component of the APNU+AFC budget estimates declined since 2016, when matched against that of the PPP/C in its 2014 Estimates, despite the fact that the overall budgetary allocations increased significantly. In contract, the recurrent component increased by 67 per cent, a clear indication of consumption being given disproportionate priority over investment and capital formation.

The point in that comparison, as pointed out by the Vice-President, is that it is under the capital works component of the budget that provisions are made to upgrade and expand existing infrastructural works including the building of schools, hospitals, roads, bridges and sea defences, all of which are essential for long-term growth and sustainable development.

What is even more significant is the fact that the PPP/C administration is able to expand on its capital works programme without imposing any new taxes, while at the same time allowing for the real income of Guyanese to steadily increase. Unlike the previous administration which imposed heavy taxes on the working people, the PPP/C was able to accelerate the growth trajectory of the country while at the same time improving the quality of life of the Guyanese people by way of higher levels of disposable income, tax reductions, subsidies to vulnerable groups, cash transfers and grants to parents of school children.

This is what sustainable development is all about. It is about creating the conditions for the economy to grow at an accelerated pace; about wealth creation and ensuring that the wealth of the country is distributed in a fair and equitable manner. The increase in the overall standard of living is only possible with an increase in the size of the national pie. Without an increase in national wealth, inflationary tendencies would step in, and like a monster, eat into the real value of disposable incomes. This is exactly what transpired under the PNC regime when the standard of living of the Guyanese people actually decreased with every salary increase. There were money increases, but the real value of those increases got progressively smaller, resulting in a decrease in the basket of goods and services of the working people.

The philosophy of savings and investment is what has been a major driver of economic growth in several parts of the world, in particular the Asian economies such as China, India, Malaysia, Singapore, Thailand and South Korea. In his book “Megatrends 2000”, John Naisbitt examined development trends in a number of Asian economies and attributed that development to a number of interacting variables which have reshaped the economies, governments and cultures of these Asian economic ‘tigers’. Among some of those factors were a culture of savings and investment, greater information and communications networks, technological innovations, women empowerment and market-driven approaches to wealth-creation.

With the transformative changes and developments taking place in Guyana today due in part to the country’s emergence as an oil and gas economy, the country can learn from the experiences of these Asian economies. And while Guyana may not have the advantage of market size, it can become integrated in the global market place by way of ensuring greater competitiveness and strategic market and investment linkages.

This is exactly what a bigger capital budget is intended to do. It is about modernising the physical infrastructure of the country, investing in information and communications technologies, building a critical mass of social capital, cheaper, cleaner and more reliable energy and generally in laying the foundations for economic take-off.

President Dr. Mohamed Irfaan Ali has said that the resources the country gets from oil and gas and from the other sectors must redound not only to the benefit of the Guyanese people but the people of CARICOM. This is indeed visionary thinking of a regional and global statesman and augers well for the country as a regional development hub which could very well propel the growth trajectory of the region as a whole.